‘Positive’ news for city’s bond rating

Moody’s Investors Service, the credit rating agency that downgraded the city’s bond rating two years ago to just a step above junk bond status, announced Monday that it improved the city’s outlook from stable to positive.

The announcement came after the City Council approved a measure on June 3 to issue $8.2 million in serial bonds to pay down the remainder of a nearly $14 million deficit from fiscal 2011-12.

Last year, Moody’s revised Long Beach’s credit rating outlook from negative to stable, which prompted the city to lift its declaration of a fiscal crisis. The city declared a fiscal crisis in February 2012, after it uncovered a multi-million dollar deficit. Two months earlier, Moody’s had downgraded the city’s rating an unprecedented five levels, from A1 to Baa3, just one step above junk bond status, which the agency said reflected the city’s deteriorating financial position since 2008.

On June 9, Moody’s affirmed the Baa3 rating on the city’s $8.2 million general obligation serial bonds — which were expected to be sold on June 12 — and the agency said that the positive outlook “reflects improved fiscal controls and policies implemented by a new management team which will result in surplus operations in fiscal 2013 for the first time in five years.”

“This is the latest in a series of positive reports from Moody’s, and we are extremely pleased to see the improved ratings outlook as we continue to implement our long-term fiscal recovery plan,” City Council President Scott Mandel said in a statement.

Gov. Andrew Cuomo approved a $12 million borrowing measure earlier this year to help Long Beach cover costs associated with Hurricane Sandy and an “inherited” deficit. The bill gives the city the ability to issue up to $12 million in serial bonds, to be paid over 10 years, to finance “extraordinary” Sandy-related costs that are not eligible for reimbursement by the federal or state government, and to liquidate deficits in its general, sewer, water and risk-management funds from fiscal 2011-12.